How to promote your online gambling business

Attracting and retaining customers plays a vital role in the overall success of your online gambling business. You might have the best online casino software and website in the world but without customers you won’t generate any profits. So how do you promote your sportsbook, casino or poker room?

Personally, I consider the overall reputation of your brand as the most effective marketing strategy. A solid reputation guarantees customers that your website is safe to gamble. Things like having a license, ensuring fast payouts and respecting customer’s privacy are more important than providing a wide variety of gambling products and offering big bonuses.

In this industry, just a few unsatisfied customers can bring your business down. With so many forums and blogs related to gambling, just a few complains and bad reviews are enough to lose customers’ trust in your brand.

Nevertheless by constantly improving your products and giving customers what they want is the safest and quickest way to build that reputation in a very competitive industry.  

But what customers want from an online gambling website? Let’s see just a few aspects:

• ·         A safe and private environment to gamble;
• ·         Fast and secured payouts and deposits;
• ·         Diversity of payment methods;
• ·         Easy navigation on the website with quick access to products and bet markets;
• ·         Professional and prompt customer support;
• ·         Low profit margins for sportsbook which basically means higher odds;  high payout percentage for all casino games; lower rakes for poker;
• ·         High quality and diversified gambling products;
• ·         Additional services like live streaming, mobile gambling and so on.

Now, let’s look at some other ways to promote your brand.

Bonuses are used by bookmakers to attract and retain customers. Different bonuses are used for different situations:

A "Welcome bonus", also known as "First deposit bonus" or "Match bonus”, is offered to all new customer opening an account. Ex: 100% Welcome Bonus up to €200. This means customers get a bonus with a value equal to the deposit but no higher than €200.

Free bet bonus is offered by bookmakers to promote a particular event. In order to qualify for this type of bonus, customers need to place an initial bet and then claim the free bonus usually with the same value as the initial bet.

An inactivity bonus can be offered to customers that have an account but with no gambling activity for a certain period of time. The bonus acts like an incentive for the customer to start gambling again.

Other bonuses can be: redeposit bonus, win/lose bonuses (bonus offered in order to retain a customer when he won/lost a certain amount and to avoid a payout request), free iSlot spins for the casino, promotions for poker tournament participation, referral bonuses, using a certain payment method bonus and many more.  As an operator you can create and promote your own set of bonuses according to your marketing strategy.

Referral and affiliate programs are very effective marketing strategies to attract new customers. A referral program rewards users win commissions or bonuses for promoting your website to other people. Affiliate programs are designed for webmasters that will post your marketing material (text links, banners, adds, etc.) on their websites and gain a commission for the traffic they divert to your website.

A study made in 2010 by Philipp Schmitt (Ph.D. student in the Marketing Department, School of Business and Economics, Goethe University Frankfurt) and Bernd Skiera (Professor of Marketing and Member of the Board of the E-Finance Lab, School of Business and Economics, Goethe University Frankfurt) shows that referral programs are very efficient marketing strategies. By tracking 10.000 customers of a German bank for 3 years their study shows that referred customers: have a higher contribution margin, have a higher retention rate and are more valuable both in the short and long run. The average value of a referred customer is at least 16% higher than that of a non-referred customer with similar demographics and time of acquisition.

Those are just a few marketing strategies operators can integrate in a larger marketing campaign that could include online marketing as well as traditional marketing strategies like brochures, vouchers, posters, banners and many more.

I hope you found this material useful and I’m looking forward to hear only good things about your online gambling brand.  

Online Gambling Licences

In order to provide betting services like betting shops, on-course betting, betting websites, betting exchanges, pool betting and trading rooms, you need an operating licence issued by a gambling licensing organization.

Due to the fact that getting an online gambling licence in North America or Europe is very difficult and expensive, many online gambling companies choose to acquire an offshore gambling license.

The most popular offshore online gambling regulators are:

Alderney

Info: Established in 2000, The Alderney Control Commission (AGCC) is an independent and non political organization that regulates eGambling. Alderney is the third largest of the British Channel Islands with its own government, legislature and company laws and is considered as one of the world’s leading offshore finance centers.

Fees: A licencee with no previous licensable activity in Alderney, for its first year – 35.000 ₤.

Website: http://www.gamblingcontrol.org

Malta

Info: The Lotteries and Gaming Authority (LGA) is a public single regulatory body that is responsible for the governance of all forms of gaming in Malta. Under the Remote Gaming Regulations, 2004 there are four classes by which an operator may be licenced. In order to provide Internet betting/gaming services in Malta one should apply for a licence of the relevant class:

Class 1: online lotteries, skill games and casino games

Class 2: spread betting, pool betting, fixed odds betting

Class 3: poker network, betting exchange, game portals, P2P

Class 4: managing and hosting remote gaming operators

Fees:

Gaming tax fee:

Tax	€/ /%
Class 1 Licence	4.660 €	for the first 6 months
	7.000 €	Per month for the entire duration of the licence
Class 1 Licence operating on a hosting platform in possession of a Class 4 Remote Gaming Licence (Class 1 on 4)	1.200 €	Per month for the entire duration of the licence
Class 2 Licence	0.5 %	Of the gross amount of bets accepted in remote betting operations
Class 2 Licence operating on a hosting platform in possession of a Class 4 Remote Gaming Licence ( Class 2 on 4)	0.5%	Of real income
Class 3 Licence	5%	Of real income
Class 3 Licence operating on a hosting platform in possession of a Class 4 Remote Gaming Licence (Class 3 on 4).	5%	Of real income
Class 4 licence hosting and managing other remote gaming operators	Nil	For the first 6 months
	2.330 €	For the subsequent 6 months
	4.660 €	Per month thereafter for the entire duration of the licence
Class 4 licence hosting and managing an operator which is not in possession of the relevant Class 1, 2 or 3 licence in terms of the regulations, however hosting an EEA licensed Business to consumer operator	1.165 €	Per month, per operator, paid by the Class 4 licensee.

Application fee: 2.330 EUR (onetime fee)

Certification Fee: 2.500 EUR (onetime fee)

Licence Fee: 8.500 EUR (yearly fee)

Each gambling licence is issued for five years regardless of class with the possibility to be renewed afterwards for the same period.

Website: http://www.lga.org.mt

Gibraltar

Info: Gibraltar is a British Overseas Territory that is part of the European Union. In the early 2000s, many bookmakers and online gaming operators relocated to Gibraltar to benefit from operating in a regulated jurisdiction with a favorable corporate tax regime. However, this corporate tax regime for non-resident controlled companies was phased out by January 2011 and replaced by a fixed corporate tax rate of 10%.

Gibraltar Regulatory Authority is the official gambling licensing organization.

Fees:

For fixed-odds and betting exchange operations – 1% of the turnover up to £42,500 of annual turnover with the gaming tax capped at £425,000 per year, with a minimum annual tax payable of £85,000.

For internet casinos – 1% of the gaming yield or gross profit with the same maximum and minimum cap as for fixed-odds betting.

Website: https://www.gibraltar.gov.gi/remotegambling

Isle of Man

Info: Isle of Man is a self-governing British Crown Dependency, located in the Irish Sea between the islands of Great Britain and Ireland. 

The rate of corporation tax is 0% provided the gambling website does not accept bets from Isle of Man residents. The official licensing gambling organization is Isle of Man’s Gambling Supervision Commission.

Fees:

Gaming tax:

1.5% for gross gaming yield not exceeding 20.000.000 ₤ per year.

0.5% for gross gaming yield between 20.000.000 – 40.000.000 ₤ per year.

0.1% for gross gaming yield exceeding 40.000.000 ₤ per year.

Other fees:

Licensing application fee is 1.000 ₤

Licence fees: 35.000 ₤ gambling site and 5.000 ₤ for sub-licenced

Licence is valid for 5 years.

Website: http://www.gov.im/gambling/

Curacao

Info: Caracao is an island off the Venezuelan coast in the southern Caribbean Sea, part of the Dutch Caribbean and a constituent country of the Kingdom of Netherlands.

Prior to 10 October 2010, when the Netherlands Antilles was dissolved, Curaçao was administered as the Island Territory of Curaçao, being one of five island territories of the former Netherlands Antilles.

Licencees are issued by the Governor of Curacao which provides only one type of licence that covers: operators of services, software providers, affiliates, white-label operators.

Licences are offered in two formats: master licence (opens the possibility to sub-licence third parties subject) and sub-licence (the same rights as master licence, but without the possibility of sub-licensing).

Fees:

Gaming tax: 0% tax on gross bets. Guarantee deposit: 60.000 $.

Licence fees: Master licence – 10.000 $/ month for the first 2 years. Afterwards, the licence fee is negotiated; sub-licences are procured from a master licence holder and the fees range between 2.000 $ – 4000 $. A licence is valid for 5 years for a master licence and for an indefinite time period for a sub-licence.

Website: http://www.curacao-egaming.com/

Costa Rica

Info: Costa Rica  is a country in Central America, bordered by Nicaragua to the north, Panama to the southeast, the Pacific Ocean to the west, the Caribbean Sea to the east, and Ecuador to the south of Cocos Island.

Costa Rica is considered one of the most popular jurisdictions that offer online gambling licensing with more than 200+ online casino licensees.

Fees: The cost for an online gambling license in Costa Rica is $15.000 with a quarterly fee of $1.500 to keep it active. To obtain a license, the corporation must have a physical location in Costa Rica. 

Website: http://www.meic.go.cr/

Random Number Generators

While some casino games require a certain degree of skills that will impact the outcome of a particular game, most casino games are purely based on chance. In order to mimic the randomness and fair chances encountered in all land based casinos, online casino games use random number generator or RNG in the software that powers the game. 

For example, the RNG is responsible for generating a number from 1 to 37 in a game of European Roulette, two random numbers simultaneously for a game of Dice, a number from 1 to 52 for single deck card games. For multi deck games like online blackjack, the RNG has even more complicated mathematical algorithms to deal with while for online slots and video pokers the RNG is based on a payout percentage set for that particular game or through the casino. 

But what is a random number generator?

As the name implies, an RNG generates random numbers. A number generated by a process, whose outcome is unpredictable, and which cannot be sub sequentially reliably reproduced is called a random number. What most online casino operators don’t know is that generating truly random numbers without a repeating pattern is not an easy task.

In the field of numerical simulations, cryptography and in the gaming industry, high quality random numbers are absolutely vital. For all casino games of chance, it must not be possible for a player to increase his probability to win by discovering a bias towards certain outcomes in the game procedure. Modern lotteries and gambling machines are all based on the use of random numbers to guarantee a uniform winning probability.

There are two main classes of generators: software generators and physical generators.

Software generators

Due to the fact that computers are deterministic systems and given a certain input, a program will always produce the same output, it is impossible for a program to produce a sequence of truly random numbers. The sequence may pass some statistical randomness tests but it is always possible to reproduce. Due to the fact that the sequences produced by a program look like random sequences, these generators are called pseudo-random number generators.

Physical generators

It is important to consider the physical process used as the source of randomness when using a physical generator. This source can be based on processes described by either classical physics or by quantum physics.

While macroscopic processes described by classical physics can be used to generate random numbers, it is very important to realize that classical physics is fundamentally deterministic. The evolution of a system described by classical physics can be predicted, assuming that the initial conditions are known. One could say that determinism is hidden behind complexity.

Although their random numbers are likely to pass randomness tests, these generators are difficult to model. This means that it is impossible to verify, while acquiring numbers, that they are operating properly. In addition, it is difficult to ensure that the system is not interacting – even in a subtle way – with its environment, which could alter the quality of its output.

Contrary to classical physics, quantum physics is fundamentally random, making quantum random number generators as the only true RNGs.

How does a quantum random number generator work?

Quantum random number generator uses light as primary source of randomness. Light consists of elementary particles called photons and they exhibit random behavior in certain situations.

One of those situations is the transmission of a photon upon a semi-transparent mirror which is totally random and cannot be influenced by any external parameters. This situation is used in order to generate truly binary random numbers.  

Random number generators have to be tested on regular basis in order to ensure that they are unbiased and unpredictable. The testing should be done over a million hands dealt in card games, or through a million throws of dice.

Online Gambling Today!

The worldwide web provides countless forms of entertainment and online gambling is the second most popular form of entertainment on the internet after pornography, with the total global revenue amounted to US $ 29.95 billion just in 2012. In this context, operating an online casino can be one of the most profitable businesses on the web with huge growth potential in the upcoming years.

For an investor that never had any contact with the gambling industry, getting started into the business might look scary. In addition you can’t start an online gambling business if you’re not properly funded. Another important factor is the U.S. legislation concerning regulated online gaming (Delaware, Nevada and New Jersey passed the legislation in 2013). It is understandable that today the U.S only accounts for around 11% of global online gambling (casino, bingo, poker) gross win whereas Europe accounts for just over 54%. The situation concerning online gambling in the U.S., keeps a lot of investors away.

In regards to products: sports betting accounts for 53% (€11.5bn) of online gambling gross win in 2012, followed by casino at 25.4% (€5.5bn), poker at 14.2% (€3.1bn), and bingo at 7.4% (€1.6bn).

So where do you start? As an investor you might want to ask yourself what form of online gambling you want to provide: sportsbook, casino games, poker network, financial betting, live dealer games, horse racing, bingo and so on. Once you have decided what form of online gambling you want your business to provide, you will need a gambling license, software to handle all gambling activities, a website and a strong marketing strategy in order to attract new customers. Those are just the main items on your shopping list and not very cheap.

In the following posts I will discuss each item and what are the requirements for a successful online gambling business.